The only momentum behind the housing market is its penchant for crawling
along at a low level. The National Association of Home Builders reported that
their index of housing market activity remained low at 13 which was just above
the all time low of 8 reached early last year. Perhaps the latest reading
languishes in the backwash of the expiration of the government's homebuyer
tax credit, but time for that reasoning is running out. The Consensus
expectation has been for an uptick in the September reading to 14.

The Home Builders index is compiled from survey questions asking builders to
rate market conditions as "good", "fair", "poor"
or "very high" to "very low". The figure is thus a diffusion
index with numerical results over 50 indicating a predominance of
"good" readings. During the last ten years there has been a 75%
correlation between the y/y change in the index and new plus existing single
family home sales.

Month-to-month stability across the sub-series was pervasive. The index of
single-family home sales held at its lowest level since June of last year. The
index of sales during the next six months also held its lowest since March
2009. Diminished as well was the home builders' read that the traffic of
prospective buyers fell to its lowest since March of last year. Each of these
NAHB figures is seasonally adjusted.

The Builders' index for the West showed the greatest weakness and remained at
the lowest level since April of last year. The index for the Northeast and the
Midwest fell to the lowest since April 2009. In the South the index rose
slightly.

The Home Builders' Housing Opportunity Index, which is the share of homes
sold that could be considered affordable to a family earning the median income,
improved slightly during Q2 (the latest available figure) to 73.2%. That was
near the record high, buoyed by lower home prices, lower interest rates and
higher income. (There is a break in the series from 2002 to 2003.) During July
the median home price of $183,400 was up from the cycle low but still down 20%
from the 2007 high. The mortgage interest rate was 4.90%, the lowest for this
series which began in 1981.

The NAHB has compiled the Housing Market Index since 1985.The
weights assigned to the individual index components are .5920 for single family
detached sales, present time, .1358 for single family detached sales, next
six months; and .2722 for traffic of prospective buyers. The results, along with
other housing and remodeling indexes from NAHB Economics, are included in
Haver's SURVEYS database